Trading in the Bear Market

Given that stock markets everywhere around the world are pretty much in bear market mode now, I think it would be wise that any potential long position should be taken with great caution and only if there is a convincing case for it.

For example, instead of using the 35-week new high trading system to open a new long position in some stock, I might extend the period to say 50 or 60-week instead. This may ensure that any bullish reversal is confirmed and not just end up being a whipsaw.

I have seen stocks making making new 35-week highs over the last 18 months of the bear market, then immediately run out of steam and crash to make new lows. Logic would tell us that in a bear market, there is a higher probably that any bullish reversal is just a temporary retracement of the down trend.

Even if a long position is opened in current conditions, the position size should be less than usual, as to reduce the risk of trading a bear market.